TY - JOUR
T1 - Labor protection and financing decisions of firms: The case of China
AU - Huang, Yuxin
AU - Mukherjee, Tarun
AU - Wang, Wei
PY - 2024/7/1
Y1 - 2024/7/1
N2 - Increased labor costs enhance the human capital costs of bankruptcy and operating leverage, inducing a firm to reduce its financial leverage. Serfling (2016), among others, examines and finds support for the hypothesis. Using a sample of Chinese firms affected by 2008 stricter labor laws, we find evidence to support our hypothesis that non-SOEs, facing higher firing costs than their SOE (State-owned enterprises) counterparts, decrease their financial leverage significantly more than SOEs. Our experiment avoids some econometric shortcomings that creep into the Serfling study.
AB - Increased labor costs enhance the human capital costs of bankruptcy and operating leverage, inducing a firm to reduce its financial leverage. Serfling (2016), among others, examines and finds support for the hypothesis. Using a sample of Chinese firms affected by 2008 stricter labor laws, we find evidence to support our hypothesis that non-SOEs, facing higher firing costs than their SOE (State-owned enterprises) counterparts, decrease their financial leverage significantly more than SOEs. Our experiment avoids some econometric shortcomings that creep into the Serfling study.
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U2 - 10.1016/j.iref.2024.103396
DO - 10.1016/j.iref.2024.103396
M3 - Article
SN - 1059-0560
VL - 94
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
IS - 103396
M1 - 103396
ER -